Showing your workings, answer the following question. “Carnita and Cornwall are in partnership. The following is their trial balance as at 31 October 2020.” £ £ Capital Accounts: Carnita 400,000 Capital Accounts: Cornwall 500,000 Current Accounts: Carnita (at 1 November 2019) 164,000 Current Accounts: Cornwall (at 1 November 2019) 41,200 Drawings Accounts: Carnita 200,000 Drawings Accounts: Cornwall 160,000 Premises at cost 1,600,000 Vehicles at cost 520,000 Accumulated depreciation on vehicles at 31 October 2020 500,000 Debtors 464,200 Creditors 539,400 Stock at 31 October 2020 268,800 Bank 67,200 Bank loan at 5% 800,000 Net profit for the year 396,000 Accrued expenses 22,000 3,321,400 3,321,400 “You are given additional information as follows: i) Interest is charged on drawings, which has been calculated as: Carnita £10,000; Cornwall £8,000. ii) Interest is to be allowed on capital accounts of a rate of 8%. iii) Any profits/losses remaining are to be shared in the ratio: 60% Carnita and 40% Cornwall." “Required” 1. ‘Prepare an Appropriation Account for the year ended 31 October 2021, showing how the profit for the year is to be shared between the two partners. 2. ‘Prepare the current account for each partner for the year.’ 3. ‘Prepare the Balance Sheet of the partnership as at 31 October 2020.’
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Showing your workings, answer the following question.
“Carnita and Cornwall are in partnership. The following is their
|
|
£ |
£ |
|
Capital Accounts: Carnita |
400,000 |
|
|
Capital Accounts: Cornwall |
500,000 |
|
|
Current Accounts: Carnita (at 1 November 2019) |
164,000 |
|
|
Current Accounts: Cornwall (at 1 November 2019) |
41,200 |
|
|
Drawings Accounts: Carnita |
200,000 |
|
|
Drawings Accounts: Cornwall |
160,000 |
|
|
Premises at cost |
1,600,000 |
|
|
Vehicles at cost |
520,000 |
|
|
|
500,000 |
|
|
Debtors |
464,200 |
|
|
Creditors |
539,400 |
|
|
Stock at 31 October 2020 |
268,800 |
|
|
Bank |
67,200 |
|
|
Bank loan at 5% |
800,000 |
|
|
Net profit for the year |
396,000 |
|
|
Accrued expenses |
22,000 |
|
|
|
3,321,400 |
3,321,400 |
“You are given additional information as follows:
- i) Interest is charged on drawings, which has been calculated as: Carnita £10,000; Cornwall £8,000.
- ii) Interest is to be allowed on capital accounts of a rate of 8%.
- iii) Any
profits/losses remaining are to be shared in the ratio: 60% Carnita and 40% Cornwall."
“Required”
1. ‘Prepare an Appropriation Account for the year ended 31 October 2021, showing how the profit for the year is to be shared between the two partners.
2. ‘Prepare the current account for each partner for the year.’
3. ‘Prepare the
Step by step
Solved in 2 steps with 1 images
